An
index tracking a number of
economic indicators considered to be leading. A
leading indicator is one that occurs before an
economy has started moving in a particular direction. For example, a reduction in the average number of
hours worked by manufacturing employees is considered a leading indicator because it usually precedes an
economic slowdown or a
recession. Among the indicators used by the Composite Index of Leading Indicators are the change in the
money supply and the number of new
building permits issued for residences. It is used to help predict the direction of the economy so investors and businesses can make decisions accordingly.